Mississippi State Tax Commission v. Anthony Viola

7/1/97
IN THE COURT OF APPEALS
OF THE
STATE OF MISSISSIPPI
NO. 95-CC-00554 COA
STATE TAX COMMISSION OF MISSISSIPPI
APPELLANT
v.
ANTHONY VIOLA
APPELLEE
THIS OPINION IS NOT DESIGNATED FOR PUBLICATION AND
MAY NOT BE CITED, PURSUANT TO M.R.A.P. 35-B
TRIAL JUDGE: HON. FRANK A. RUSSELL
COURT FROM WHICH APPEALED: TISHOMINGO COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT:
GARY STRINGER, BOBBY LONG
ATTORNEY FOR APPELLEE:
JOHN A. HATCHER
NATURE OF THE CASE: CIVIL: TERMINATION STATE EMPLOYEE
TRIAL COURT DISPOSITION: TERMINATION OVERTURNED
MOTION FOR REHEARING FILED:7/28/97
CERTIORARI FILED: 9/23/97
MANDATE ISSUED: 12/17/97
BEFORE SOUTHWICK, PJ., AND DIAZ AND KING, JJ.This case was argued orally before a
panel of Fraiser, C.J. and Barber and Southwick, JJ. Due to the retirement of Chief Judge Fraiser and
the death of Judge Barber prior to decision, the present panel was formed. The new panel listened to
a tape of the oral argument.
SOUTHWICK, PJ., FOR THE COURT:
The Circuit Court of Tishomingo County reversed a decision of the Employee Appeals Board (EAB).
The Board had found that Anthony Viola was properly terminated by the State Tax Commission due
to his failure to make timely deposits of funds collected by the vehicle weigh station where he
worked. The Tax Commission appeals and alleges twelve errors in the circuit court judgment. The
thrust of these allegations is that the court exceeded its limited power of appellate review and instead
retried the underlying facts. We agree. We find that the EAB decision was in conformity with the
applicable statutes and case law. Consequently, the circuit court judgment is reversed and the EAB
decision reinstated.
FACTS
Anthony Viola was a supervisor at a highway weight scales location operated by the State Tax
Commission. Just prior to the commencement of the proceedings that we now review, Viola had
been the subject of disciplinary proceedings regarding his work at the scales in Corinth. Though those
proceedings are not on appeal here, it appears the result was an agreed judgment in the Employee
Appeals Board of January 28, 1991, whereby Viola was disciplined, but not terminated. He began
work at the scales in Iuka, which was a temporary transfer authorized by the agreed judgment. On
March 6, 1991, Viola was suspended with pay from his work at the Iuka scales. The charge was
Viola's failure timely to deposit the collections from the scale. On March 14, a written reprimand was
issued along with a recommendation that Viola be terminated.
The alleged offense fell under this section of the State Employee Handbook:
Acts of conduct occurring on or off the job which are plainly related to job performance and are of
such nature that to continue the employee in the assigned position could constitute negligence in
regard to the agency's duties to the public or to other state employees.
The notice of the precise charge against Viola was this:
Failure to make deposits of funds collected by you in a timely manner as required by General Order
87-05 (copy enclosed) requiring all state money be deposited within 24 hours. This also violates state
law that requires all state monies be deposited in a timely manner. . . .
A pre-termination hearing was conducted on March 28 before Dr. Charles Marx, chairman of the Tax
Commission. Viola was represented by counsel. Evidence was introduced of a sampling of deposits
made by Viola from the scale. Out of the 90 deposit sample, 58 had been held more than four days.
Another sample of 144 deposits that Viola made indicated 46 (32%) were at least five days late, and
70 (58%) were at least four days late. Testimony revealed that other sergeants in charge of making
deposits were making them daily. After the hearing, Dr. Marx issued on April 2 a termination letter
that was effective on April 5. Viola appealed to the Employee Appeal Board. A hearing officer
conducted a hearing entered on December 12, 1991. He dismissed the appeal and denied all relief.
The EAB itself then affirmed the hearing officer. That order was entered on October 21, 1992.
Viola's motion for reconsideration or partial reopening was denied, a point of some controversy in
subsequent proceedings because of alleged new evidence that should have caused a rehearing.
Viola then took his complaints to the Circuit Court of Tishomingo County. The court on October 21,
1993 reversed the EAB decision. In a fifty page opinion that the court noted was largely an adoption
of Viola's proposed findings of fact and conclusions of law, the court ordered Viola reinstated with
back pay and benefits. The cause was remanded to the EAB for its determination of reasonable
attorneys fees, costs that should be reimbursed Viola, and damages due for mental anguish and
related injuries. Before the remand, the Tax Commission appealed to the supreme court. On May 25,
1994, the court refused to permit the interlocutory appeal. No review occurred beyond noting the
fact that there was no final judgment.
With the supreme court appeal dismissed, the EAB entered an order on September 1, 1994, that no
statute authorized attorneys fees and damages against the Tax Commission. It further held that no
remedy under the federal statutes raised by Viola was permitted against a state or an agency such as
the Tax Commission. However, Viola was awarded almost $7,000 for the cost of preparing an
appellate transcript.
Viola gave the circuit court notice of the EAB decision. The court conducted an evidentiary hearing
on the issues it had sent to the EAB. On May 10, 1995, the court found the EAB to be in violation of
the court's remand order. The result was an award of attorneys fees, expert witness fees, and other
costs totaling approximately $37,400, for the proceedings before the EAB. In addition, the court
awarded $5,000 in attorneys fees for representation in the circuit court. No award for mental anguish
or other claims was given.
The Tax Commission appealed to the supreme court, which deflected the case here.
DISCUSSION
We will discuss each of the Tax Commission's appellate issues in order. It is evident that the parties
agree about little in this case, even to so basic a question as the standard of review. It is also evident
that by adopting Viola's proposed findings and conclusions, the circuit court injected a panoply of
alternative factual and legal issues into the case in support of its ruling. At times the forest is lost
among the trees. The forest is that this is a state employee termination appeal. The trees that have
sprung up, some not too firmly rooted, concern constitutional claims of disparate treatment, the Tax
Commission's proper adoption of personnel rules, the impact of 42 U.S.C. 1983 & 1988, whether the
EAB is part of the executive or judicial branch or somewhere in between, and a variety of other
matters. It is not that such issues are per se improper in a personnel case; it is that in this case they
serve more to sidetrack analysis than to aid it.
1. Standard of review.
The legislature left no question about the scope of review by a circuit court of a decision appealed
from the EAB. The relevant statute is this:
The scope of review of the circuit court in such cases shall be limited to a review of the record made
before the employee appeals board or hearing officer to determine if the action of the employee
appeals board is unlawful for the reason that it was:
(a) Not supported by any substantial evidence;
(b) Arbitrary or capricious; or
(c) In violation of some statutory or constitutional right of the employee.
Miss. Code Ann. 25-9-132 (2). Viola concedes only that this is one of the standards for review, but
not the exclusive standard. He argues that the EAB is left undefined in state law, and that it could be
considered a court because of its adjudicatory role. In that case, certain rules regarding review of
court proceedings should be applied.
This is a prime example of some trees getting in the way of viewing the forest. Regardless of what
label is placed on the EAB, there is a statute that defines the role of a circuit court in reviewing the
EAB's decision. That review process and limitation on issues are the normal ones even were there no
agency-specific statute for review of that agency's action. See, e.g., Board of Law Enforcement v.
Butler, 672 So. 2d 1196, 1199 (Miss. 1996). In Butler the court specifically found that the trial court
acted improperly when it conducted a hearing and took additional evidence. Butler, 672 So. 2d at
1199-1200.
Viola relies on a supreme court decision addressing appeals from the Mississippi Board of Bar
Admissions. Watkins v. Mississippi Bd. of Bar Admissions, 659 So. 2d 561 (Miss. 1995). The court
found that the record that the Board made on challenges raised by individuals who had failed the bar
exam concerned test answers and other questions about the exam. The issue that the petitioner
wished to raise was racial discrimination in various aspects of the grading process. Watkins, 659 So.
2d at 567-68. Since those questions were not something the Board process was designed to address,
a limited trial de novo on the factual basis for the allegations was allowed in chancery court. Here,
there is no comparable limitation to what could be presented before the EAB.
The supreme court has not wavered from limiting review of an agency decision to the record and the
agency's findings; substitution of the trial court's judgment for that of the agency is prohibited. Butler,
672 So. 2d at 1199. We reject Viola's various arguments that attempt to make this case an exception
to the otherwise applicable rules.
2. Substantial evidence of failure to make timely deposits.
The EAB decision is to be sustained on appeal if it is supported by "any substantial evidence." Miss.
Code Ann. 25-9-132 (2) (1991). A list was introduced of 90 deposits that had been made by Viola,
58 of which had been held longer than four days. Another summary of 144 deposits, showed 70 of
them were held more than four days. Viola's replacement as the sergeant at the Iuka scales, as well as
a previous acting sergeant at the scales, testified that completing the paperwork required to make a
deposit took no more than 30 or 45 minutes. Each of these other sergeants testified that their
deposits were made every day. In addition, there was testimony that Viola would retain receipts
despite going to the bank for other reasons. Under Mississippi Law Enforcement Rules and
Regulations, Section XI (2), deposits were to be made within 24 hours of receipt.
Viola's defense was that paperwork required prior to making a deposit was causing the delay. His
principal argument, however, is that these regulations were not properly presented to the Secretary of
State for public comment, nor approved by the State Personnel Board. In his view there were no
controlling regulations requiring a deposit within 24 hours. The Circuit Court agreed with this
argument.
The state Administrative Procedures Act provides for public notice of proposed agency rules, a
process initiated by filing the rules in the Secretary of State's office. The public may then comment.
Miss. Code Ann. 25-43-7 (1991) and 25-43-9 (1991). It is acknowledged that the rule requiring an
employee to make deposits within 24 hours was not adopted after such a procedure. However, the
Administrative Procedure Act specifically says that rules governing "only the internal management of
an agency and not affecting private rights or procedures available to the public" are not subject to the
act. Miss. Code Ann. 25-43-3(f) (Supp. 1996). The rights of the general public were not affected by
the rule in question. Instead, this rule concerned the management of personnel within the agency. The
Administrative Procedure Act has no application. The very purpose of public notice and comment is
so that the public that is affected by a rule will have an opportunity to participate in the rule's
formation. This Administrative Procedure Act does not address the formation of rules governing the
internal operation of an agency. Though there is no relevant case law on Mississippi's Administrative
Procedure Act, similar interpretations have been made by other states and by federal courts as to their
analogous statutes. E.g., Curlott v. Campbell, 598 F.2d 1175, 1180 n.8 (9th Cir. 1979) (APA
inapplicable to management and personnel matters); Mix v. University of New Orleans, 609 So. 2d
958, 960 (La. App. 4th Cir. 1992), writ denied Mix v. University of New Orleans, 612 So. 2d 83 (La.
1993) (employee grievance procedure not an APA "rule"); Conquest v. State Employee's Appeals
Com'n., 565 N.E. 2d 1086, 1088 (Ind. App. 1991 ) (policy affecting employees' work hours was not
a rule under APA).
The separate issue of whether the State Personnel Board must approve the rule is based on a
provision of that Board's manual that states "any schedule of offenses and disciplinary actions added
by the agency shall apply only to that agency and shall be submitted to the State Personnel Board for
approval prior to implementation. . . ." The Tax Commission's general order holding that an
employee was subject to dismissal for failure to comply with the requirement of timely deposits was
not submitted to the Personnel Board.
The Personnel Board's policy manual requires that any change to the "schedule of offenses and
disciplinary actions below" be approved by the Board (emphasis added). It is clear from the Board's
manual that the "schedule of offenses" that is listed immediately below this statement is Group I, II,
and III offenses as there defined. The Tax Commission did not change the schedule of offenses.
Group III offense number 11 as defined in the manual and not changed by the Tax Commission is the
offense that led to Viola's dismissal. That offense was named in the March 14, 1991, notice to Viola.
He had committed acts "plainly related to job performance [that] are of such nature that to continue
the employee in the assigned position could constitute negligence. . . ." That is a general description
approved by the Personnel Board and left unchanged by the Tax Commission. It is then for the EAB
and a court to determine whether the Commission's treating this particular employee's actions as a
Group III offense was arbitrary or capricious. We address that question next.
There was no defect in the promulgation of the rules that Viola violated.
3. Failure to make timely deposits is a proper Group III offense.
The circuit court disagreed with the Employee Appeals Board that Viola had committed a Group III
offense, and found that the EAB had been "arbitrary and capricious" in that determination. A Group
III offense is the most serious category, and commission of one such offense may lead to dismissal.
The State Tax Commission found, and EAB agreed, that failure promptly to deposit funds collected
by an arm of the Tax Commission met the following definition of a Group III offense as set out by
the State Personnel Board:
Acts of conduct occurring on or off the job which are plainly related to job performance and are of
such nature that to continue the employee in the assigned position could constitute negligence in
regard to the agency's duties to the public or to other state employees. . . .
The matter of timely deposits was considered sufficiently critical that the legislature required the
deposit of all funds received by the Tax Commission on the same day as they were collected. Miss.
Code Ann. 27-3-57 (1991). The Tax Commission, implementing the statutory mandate, then adopted
a general order that required every employee to deposit all collections within 24 hours.
An issue arose during oral argument in this court regarding whether one statute's reference to the
obligation of "state officials" to make timely deposits was inapplicable because Viola was a state
"employee." Miss. Code Ann. 7-9-21 (1991). Some case law distinguishes "officers," not "officials,"
from other employees, but we need not get into such semantics. Regardless of the reference to
"officials" in that one statute, the separate statute obligating the Tax Commission itself to make
deposits of all funds within the day of collection indisputably can only be implemented through the
actions of people, be they officials, officers or employees. Miss. Code Ann. 27-3-57 (1991). The Tax
Commission, as do all agencies, has the authority to promulgate internal procedures on how its
statutory obligations are to be met. The legislature no doubt would be astounded to learn that despite
their mandate of deposits within 24 hours, the Tax Commission is not empowered to obligate their
employees to carry out that mandate.
The trial court erred in finding the Tax Commission's decision arbitrary and capricious. One of the
central duties, indeed, the core duty of the Tax Commission, is to collect taxes and make them
available for state use. The timely deposit of vast sums of money that are collected in the various
ways set out in the statute is of the essence of this agency's duty to the public. An employee's failure
to perform his part in carrying out that core function is a serious offense.
The Tax Commission was not arbitrary nor capricious in finding this to be a Group III offense.
4. Is counseling required before termination for a Group III offense?
The trial court in its initial decision did not have the benefit of a recent supreme court case on the
issue of counseling of an employee before termination. By the time of the final circuit court action,
which followed an aborted appeal to the supreme court and a remand to the EAB, this new decision
had been issued. Young v. Mississippi State Tax Com'n., 635 So. 2d 869 (Miss. 1994). The supreme
court pointed out that the State Personnel Board's policy was to require gradual increases in
disciplinary action "wherever practical." Young, 635 So. 2d at 872. Thus the initial discipline usually
should not be the most severe, i.e., dismissal. The court made it clear that the State Personnel Board
set a policy that the agency "may attempt to correct unacceptable behavior 'whenever practical' prior
to taking formal action against an employee." Id. at 873. The court specifically said that a
"performance improvement plan" is not required by the regulations. Id. "Practical" considerations
could lead to dismissal without an improvement plan. Id. The circuit court took that language and
said that the Supreme Court had not addressed whether counseling was required before discipline.
The trial court quoted a section of the State Personnel Board regulations that required an agency to
counsel employees who "demonstrated unsatisfactory performance." The court also cited a statute
that described one of the principles of the state personnel system as the retention of employees. Miss.
Code Ann. 25-9-103(d) (1991).
The trial court was correct in its observations, but not in its conclusion. First, counseling and
"performance improvement plans" are different methods for an agency to correct what it perceives to
be employee deficiencies. If an agency is solely dealing with unsatisfactory performance, and not
something that rises to a Group III offense that might justify termination, then counseling is required.
The circuit court's merger of the dismissal authority with the counseling obligations for unsatisfactory
performance was incorrect.
The supreme court's decision in Young permits an employee to be dismissed or otherwise disciplined
if in the agency's proper exercise of discretion it concludes that counseling or an improvement plan
are not practical initial steps. We do not find the agency to have been arbitrary or capricious in that
conclusion here.
5. Failure to conduct pre-termination hearing within 20 days.
A regulation of the State Personnel Board requires the following:
In extraordinary circumstances an employee may be suspended immediately with pay. Such employee
must be given an opportunity for a hearing within twenty (20) working days of the suspension, at
which time the appointing authority may make a final decision.
Viola was suspended with pay on March 6. The conference was not held until March 28, 22 calendar
days later. In the normal scheme of employment, it would be obvious that 22 calendar days would not
exceed 20 working days. A question arises in this case because of the following stipulation: a law
enforcement officer with the State Tax Commission is considered to be on call 24 hours a day, seven
days a week. There is no evidence that Viola worked 24 hours day, seven days a week. In February,
to pick the comparable days of the 6th of the month to the 28th, Viola worked nine days. Since he
was suspended from March 6 to March 28, of course, Viola worked no days during that period.
The import of this personnel board regulation is that an employee will receive a hearing promptly.
The bright line rule for promptness was 20 working days. When an employee's schedule is not as
rigid as the norm, the bright line can at times be a little more difficult to discern. Nonetheless, we see
clearly that the 22 days that passed between the notice and the hearing was not more than 20 working
days.
6. Denial of due process by the notice and the hearings.
At the March 28, 1991, hearing, Viola asked for clearer specifications of the charges against him.
The circuit court found it error for Dr. Marx not to delay ruling. The trial court relied upon a case
that an official should not proceed, if, as the circuit court quoted, the decision maker "could be
expected to know that certain conduct would violate statutorily constitutional rights. . . ." Harlow v.
Fitzgerald, 457 U.S. 800, 819 (1982). When that occurs, the official is to "hesitate" to act. Id."Harlow" was Bryce Harlow, a senior aide to President Richard Nixon. The issue was whether
Harlow and another aide, Alexander Butterfield, the man who announced to the Senate Watergate
Committee that the White House tapes existed, were immune from suit for acts they took that
allegedly violated Ernest Fitzgerald's constitutional rights. The issue before the United States
Supreme Court was whether Harlow and Butterfield had absolute or some lesser version of immunity
from suit since the allegations concerned steps that they took in their official governmental capacity.
The Supreme Court held that if a legitimate issue existed that a contemplated action would violate
someone's constitutional rights, and absent exigent circumstances, immunity could be lost if the
official did not delay action. Harlow, 457 U.S. at 818.
Viola makes this a due process right of "hesitation" that was ignored in the present case. The case
had nothing to do with due process, and only discussed immunity. Viola allegedly did not have
sufficient information on the charges. In fact, on March 14 written notice of the charges was given to
Viola. That notice was that he had violated a specific section of the Employee Handbook, already
quoted above in this opinion, concerning "negligence in regard to the agency's duties to the public. . .
." The charge was then specified to be the
failure to make deposit of funds collected by you in a timely manner as required by general order 87-
05 (copy enclosed) requiring that all state money be deposited within twenty-four hours. . . . An
example of this appeared on March 1, 1991, when twenty-six receipts written on dates ranging from
February 20 through February 28 were deposited. On that same date $527.40 was collected by you
but not deposited until March 6, 1991.
Viola at no time has challenged the substance of these allegations. Instead, he has alleged the various
defects in the adoption of the 24 hour rule, and other details set out in previous discussions.
The U. S. Supreme Court has required "oral or written notice of the charges against him, an
explanation of the employer's evidence, and an opportunity to present his side of the story."
Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 546 (1985). The State Tax Commission notice
and the hearing fully complied with this requirement. There is no constitutional hesitation right. This
is the right that is relevant here: the process be followed that is due a state employee prior to
termination. If someone has gotten insufficient notice, the proceedings should not continue. That
requirement does not need to be transformed into a new constitutional right. There was adequate
notice in this case as defined by Loudermill. Dr. Marx properly proceeded with the hearing.
7. Collateral estoppel/res judicata effect of unemployment benefit determination.
During the pendency of the termination proceedings and appeals, the Mississippi Employment
Security Commission (MESC) ruled on Viola's claim for unemployment benefits. The hearing was
held before an appeals referee of the MESC on May 10, 1991. Benefits were awarded, and a finding
of no misconduct was entered. The Tax Commission did not appeal that ruling. There were factual
questions of whether the attorney from the State Tax Commission received proper notice of the
decision, and whether she tried to have the proceedings reopened. The record supports that notice
was given, and that no steps were taken to appeal or reopen.
The Employee Appeals Board found that the MESC ruling was not collateral estoppel or res judicata
of whether Viola had committed a Group III offense. However, the circuit court disagreed. It relied
on a supreme court decision which in its statement of facts commented that the Employee Appeals
Board in that separate case had permitted an unemployment benefits determination to be collateral
estoppel in proceedings to terminate the employee. Bertucci v. Mississippi Dept. of Corrections, 597
So. 2d 643, 644-45 (Miss. 1992).
The trial court found there to be a disparity in treatment by the EAB in one case applying collateral
estoppel, and not in another. We deal with that argument first. Collateral estoppel and res judicata are
legal concepts with definable meanings, the ultimate decision on their application being a matter for
de novo review by a court. The Bertucci supreme court decision dismissed the appeal, and made
absolutely no decision regarding the applicability of these legal doctrines. Bertucci, 597 So. 2d at
647. If the EAB in fact did determine that an earlier unemployment benefits determination would be
collateral estoppel in a subsequent termination action, then assuming for purposes of analysis that the
conclusion was in error, all subsequent employees are not entitled to the same error. There is not a
due process or equitable right to an erroneous application of the law. This is not an allegation, and
certainly no proof, that the EAB since time immemorial had applied collateral estoppel in such
circumstances, and then reversed itself as to Viola. It is only an allegation that in one other case the
EAB did consider collateral estoppel applicable.
We must then determine whether in fact the unemployment benefits determination was an estoppel to
a termination based on the same reasons. There is no specific Mississippi case law that any party has
found, but there are many Mississippi cases defining res judicata and collateral estoppel. To
understand the meaning of those definitions in this case, we first set out the different procedures for
determining unemployment compensation and for permitting the termination of a state employee.
Under the unemployment compensation statutes, the former employee has the burden of proof of
showing good cause for voluntarily leaving work, while the burden of proof of misconduct that led to
involuntary dismissal is on the employer. Miss. Code Ann. 71-5-513 A(1)(c) (Supp. 1996).
Conversely, in a termination action, the burden is upon an employee who has been dismissed "to
furnish evidence that the reasons stated in the notice of dismissal . . . are not true or are not sufficient
grounds for the action taken. . . ." Miss. Code Ann. 25-9-127 (Supp. 1996).
A recent Supreme Court case decision has restated the outline of and distinctions between collateral
estoppel and res judicata:
Generally, four identities must be present before the doctrine of res judicata will be applicable: (1)
identity of the subject matter of the action, (2) identity of the cause of action, (3) identity of the
parties to the cause of action, and (4) identity of the quality or character of a person against whom
the claim is made...
When collateral estoppel is applicable, the parties will be precluded from relitigating a specific issue
actually litigated, determined by, and essential to the judgment in a former action, even though a
different cause of action is the subject of the subsequent action. And collateral estoppel, unlike the
broader doctrine of res judicata, applies only to questions actually litigated in a prior suit, and not to
questions which might have been litigated.
Marcum v. Mississippi Valley Gas Co., Inc., 672 So. 2d 730, 732-733 (Miss. 1996), quoting
Dunaway v. W.H. Hopper and Associates, Inc., 422 So. 2d 749 (Miss. 1982). See also Norman v.
Bucklew, 684 So. 2d 1246 (Miss. 1996). The Marcum court relied on the Restatement (Second) of
Judgments for some of its analysis. Marcum, 672 So. 2d at 734. We also turn to that Restatement for
the application of these doctrines to administrative tribunals, an issue that did not exist in Marcum. In
the Restatement, the following conclusions are made:
(1) Except as stated in Subsections (2), (3), and (4), a valid and final adjudicative determination by an
administrative tribunal has the same effects under the rules of res judicata, subject to the same
exceptions and qualifications, as a judgment of a court.
(2) . . .;
(3) An adjudicative determination of a claim by an administrative tribunal does not preclude
relitigation in another tribunal of the same or a related claim based on the same transaction if the
scheme of remedies permits assertion of the second claim notwithstanding the adjudication of the first
claim.
(4) An adjudicative determination of an issue by an administrative tribunal does not preclude re-
litigation of that issue in another tribunal if according preclusive effect to determination of the issue
will be incompatible with a legislative policy that:
(a) the determination of the tribunal adjudicating the issue is not to be accorded conclusive effect in
subsequent proceeding; or
(b) the tribunal in which the issue subsequently arises be free to make an independent determination
of the issue in question.
....
Restatement (2nd) of Judgments, 83 (1982).
Our starting point is that the legislature created two separate statutory agencies and procedures. One
is for an employee to contest his termination, and the other is for the employee to make a claim for
unemployment compensation. There is nothing in either statute that suggests a resolution under one
should have preclusive effect on the other. The dual proceedings can be occurring simultaneously,
and there is no need for continual advising of either the MESC or the EAB of whether the other
board or commission's proceedings have been concluded. For example, if the unemployment
compensation issue was resolved adversely to the employee prior to the hearing by the Employees
Appeal Board, we do not find it compatible with the EAB process that the unemployment
compensation decision prevents the EAB from making an independent decision regarding the
discharge. Viola, of course, wants the opposite, i.e., that a favorable unemployment benefits decision
should preclude any separate conclusion by the EAB.
Looking to the Restatement's point of legislative policy, we note that the EAB is obligated to provide
the employee a "de novo" hearing with "all applicable safeguards of procedural due process." Miss.
Code. Ann. 25-9-131(1) (1991). The Tax Commission cited, but the circuit court rejected, two cases
from other jurisdictions that found no collateral estoppel under similar circumstances. Shovelin v.
Central New Mexico Elective Co-op., Inc., 850 P. 2d 996, 1004-1005 (N.M. 1993); Shelton v. Oscar
Meyer Foods Corp., 459 S.E. 2d 851, 854-855 (S.C. 1995). We find those cases persuasive, and also
address a quite similar decision of the Iowa Supreme Court. Matter of Kjos, 346 N.W. 2d 25 (Iowa
1984). There the state commission denied a police officer unemployment benefits because of a finding
that misconduct caused his dismissal. The Iowa Supreme Court in reviewing the appeal from a
separate administrative proceeding terminating the employee, found that the earlier unemployment
benefits decision was not collateral estoppel. Kjos, 346 N.W. 2d at 28-29. Relying on the
Restatement of Judgments, the court rejected issue preclusion for the following reasons:
1. "The present controversy involves two independent state administrative tribunals which may
operate simultaneously in adjudicating different claims based on the same facts." Id. at 28.
2. The standards for "misconduct" under the unemployment benefits scheme and in Iowa's analog to
the EAB were different: "It is sufficient to note the standards are different and neither is totally
subsumed in the other." Id. at 29.
3. "We find that by establishing one administrative remedy for challenging the discharge and a
separate remedy for seeking unemployment compensation the legislature had provided a scheme of
remedies in which an adjudication of one claim will not bar the other." Id.We find these arguments to be compelling. The only reason that the circuit court stated otherwise
was reliance upon Bertucci, 597 So. 2d at 645. As already discussed, that case makes no decision
regarding the application of collateral estoppel, but merely notes that the EAB applied that doctrine
in the case. Id.
Similar to the Iowa statutory scheme in Kjos, our statutes that permit dismissal for misconduct create
a factual standard that is different from the facts that control over whether unemployment benefits
should be denied to a terminated employee. Unemployment benefits may be denied to a terminated
employee only if the person was discharged for misconduct. Miss. Code Ann. 71-5-513 A. (1)(b)
(Supp. 1996). "Misconduct" requires a wanton disregard of the employer's interests. Mississippi
Employment Sec. Com'n v. Phillips, 562 So. 2d 115, 118 (Miss. 1990). On the other hand, an
employee may properly be terminated "for inefficiency or other good cause.. . ." Miss. Code Ann. 25-
9-127 (Supp. 1996). Group III offenses permitting discharge of a state employee are those
"occurring on or off the job which are plainly related to job performance and are of such nature that
to continue the employee in the assigned position could constitute negligence in regard to the
agency's duties to the public or to other state employees. . . ." As the Iowa Supreme Court stated
regarding the different standards for awarding unemployment benefits and for rejecting a termination,
"[I]t is sufficient to note the standards are different and neither is totally subsumed in the other."
Kjos, 346 N.W. 2d at 29.
We hold that since the legislature established dual statutory schemes for awarding unemployment
compensation and for an employee to contest a discharge, neither agency (the EAB or the MESC)
has the right for its decision to control what the other agency does. Collateral estoppel does not
apply.
8. The effect of a prior EAB order on admission of certain evidence.
Viola argues that the State Tax Commission agreed in the previous disciplinary proceeding that was
concluded a few weeks before the present one began, to "forgive" Viola for offenses that occurred
prior to that previous hearing.
We have examined the documents that were introduced in the EAB hearing that resulted in Viola's
dismissal. We agree with the Tax Commission that three of the contested exhibits only deal with
events that occurred after the agreed judgment in the previous disciplinary proceedings. The other
exhibits do include some events prior to the "forgiveness" date, but these exhibits were accepted into
evidence to rebut allegations Viola had made regarding disparate treatment. The hearing officer
specifically said that he admitted the exhibits because "there's been some allegations that Mr. Viola
was being treated differently than similar situated employees."
We find no error in the admission of these documents.
9. EAB's failure to reopen the case.
The circuit court found the EAB to have been arbitrary and capricious when it refused to reopen the
case upon Viola's motion. After the EAB had ruled the discharge proper, the following grounds were
stated in a motion partially to reopen the case:
1. Another similarly situated employee had failed to deposit funds promptly and had not been
discharged;
2. The Mississippi Department of Transportation was created and the transfer of the law enforcement
division in which the other worked were transferred to that department.
Taking the second point first, the transfer of the division in which Viola had worked to a new agency,
the Mississippi Department of Transportation, effective on July 1, 1992, should not put in abeyance
all personnel matters that the State Tax Commission had initiated. Until the Department of
Transportation assumed authority, the State Tax Commission was entitled to proceed and was indeed
obligated to proceed with its whole range of responsibilities. There was no reason for the EAB to
reopen the case on that grounds.
The other allegation is that Viola had found evidence of disparate treatment. The information
regarding the employee came from an affidavit of Viola himself. It is based on being "advised by
employees in the State Tax Commission" that another individual who had failed to "surrender funds
in a timely manner for the third time" had merely been reprimanded. The assertions in the remainder
of the affidavit do not indicate that they are based upon newly discovered evidence. Only the
allegation regarding another specific employee was said to be new evidence.
The first difficulty with Viola's argument is that Rule 26C of the EAB Administrative Rules requires
that the moving party contact the opposing party and the EAB to arrange for a telephone conference
on the motion. The parties agree that no such effort to bring the motion on for hearing occurred.
Thus the refusal to grant a motion that is not pursued by the moving party does not constitute
arbitrariness.
Secondly, the issue of whether Viola had been treated more harshly than other employees had been
thoroughly reviewed by the EAB. The EAB specifically found, based on the evidence that Viola had
already introduced, that he was not "the victim of retaliatory treatment or disparate treatment." The
hearing officer, who heard the evidence and whose opinion was affirmed by the EAB, said that much
of the hearing "was devoted to [the Tax Commission's] rebuttal [of Viola's] claims of disparate
treatment based upon political and union activities. . . ." The hearing officer found these claims to be
without merit. One new allegation of disparate treatment, based only on an affidavit of the claimant
himself, could have easily been considered by the EAB to be cumulative and not worthy of reopening
the case. We do not find that decision to be arbitrary or capricious.
10. Abuse of discretion in overruling Motion for Reconsideration or for specific findings of facts
and conclusions of law.
The circuit court stated that an additional reason for reversing was that the EAB should have
sustained Viola's motion for specific findings of fact and conclusions of law. The order of the EAB
was brief. Its substance was that Viola (1) had committed the offenses charged, (2) that he was not
the victim of retaliatory treatment or disparate treatment, and (3) that his termination was not
politically motivated, and therefore termination was justified.
Administrative agencies would better perform their adjudicatory responsibilities by making detailed
findings of fact and conclusions of law. Still, the supreme court has refused to require that be done.
In some cases, the supreme court has found the reviewing of administrative decisions to be difficult
because of the absence of such findings. Duckworth v. Mississippi State Bd. of Pharmacy, 583 So. 2d
200, 202 (Miss. 1991). The restrictions courts must honor in reviewing administrative decisions have
been variously articulated. What is evident is that the courts
are not permitted to make administrative decisions and perform the functions of an administrative
agency. . . . The appeal is a limited one, however, since the courts cannot enter the field of the
administrative agency. The court will entertain the appeal to determine whether or not the order of
the administrative agency (1) was supported by substantial evidence, (2) was arbitrary or capricious,
(3) was beyond the power of the administrative agency to make, or (4) violated some statutorily
constitutional right of the complaining party.
Mississippi State Tax Com'n. v. Mississippi-Alabama State Fair, 222 So. 2d 664, 665 (Miss. 1969),
cert. denied, 396 U.S. 940 (1969) .
The only fact finding that is required by the administrative agency is "ultimate" fact finding. Illinois
Cent. R. Co. v. Jackson Ready-Mix Concrete, 137 So. 2d 542, 546 (Miss. 1962). Though the "better
form" is for more detail fact finding, the absence of such detail fact finding will not itself constitute
reversible error. Mississippi Public Service Com'n v. AAA Anserphone, Inc., 372 So. 2d 259, 264-65
(Miss. 1979).
In this case, the findings of the Employees Appeal Board included the ultimate fact of guilt of the
offense charged. The EAB in addition addressed to the defenses raised by Viola, including the
retaliatory treatment and political motivation. These findings are supported by substantial evidence,
and their brevity is not grounds for reversal.
11. The circuit court's consideration of evidence outside of the EAB record.
This issue concerns evidence that the circuit court admitted regarding damages and attorneys fees
that should be awarded to Viola. The Tax Commission argues that taking such evidence is a violation
of the restriction that appellate courts (including a trial court acting on appellate review) "is limited to
the record and to the agency findings." Mississippi Com'n. on Environmental Quality v. Chickasaw
County Bd. of Sup'rs., 621 So. 2d 1211, 1216 (Miss. 1993). That limitation is a correct statement of
the law. Its application to the facts of this case is moot since we have already concluded that the
dismissal was proper. Without an improper dismissal, there is no basis on which damages or attorneys
fees could be awarded.
12. Awarding of attorney fees, court costs, pain, suffering and mental anguish under 42
U.S.C. Sections 1983 and 1988
The circuit court awarded a total of over $40,000 in attorneys fees, court costs and other damages to
Viola. The circuit court made this award under 42 U.S.C. Sections 1983 and 1988. The award was,
of course, against the State Tax Commission.
The United States Supreme Court has determined that a state and its subdivisions are not "persons"
under Section 1983, against whom the penalties of this statute can be applied. Will v. Michigan Dept.
of State Police, 491 U.S. 58, 65 (1989). Viola cites one case on the ability of state courts to enforce
the provisions of these two federal statutes, but it does not address the prohibition of using these
statutes against a state. Barrett v. Miller, 599 So. 2d 559, 564 (Miss. 1992). The two cases that
Viola cites that involve state agencies were decided before Will, and therefore are of no utility on the
issue raised here. Burrell v. Mississippi State Tax Com'n, 536 So. 2d 848 (Miss. 1988); Marx v.
Truck Renting and Leasing Ass'n Inc., 520 So. 2d 1333 (Miss. 1987).
We do not further examine this issue because, as was also true under the preceding issue, our reversal
of the circuit court and agreement with the EAB that Viola was properly discharged, makes moot the
issue of damages.
Conclusion
This appeal from a circuit court's reversal of an administrative agency is somewhat unusual. Unlike
the normal case, the appellant is not so much in need of demonstrating where the lower court was
wrong; the appellant must prove that the administrative agency was right. In this case, the Tax
Commission quite properly raised issues regarding the circuit court's incorrect analysis of the EAB's
decision. However, even if we agree with all the reasons raised by the Tax Commission, we still need
to satisfy ourselves that the circuit court was not correct in reversing the EAB for some other reason.
In other words, if the circuit court had some unassailable reason for reversing the EAB, an appellant
might decide just to ignore that reason on appeal. We would err in reversing merely because we
agreed with an appellant on all the errors that it discussed.
We have examined the circuit court's two opinions, and find no separate justification for the reversal
of the EAB. Instead, we conclude that the EAB's decision was supported by substantial evidence,
was not arbitrary nor capricious, and did not violate a statutory or constitutional right of the
employee.
THE JUDGMENTS OF THE CIRCUIT COURT OF TISHOMINGO COUNTY OF MAY 10,
1995 AND OF OCTOBER 21, 1993 ARE REVERSED, AND THE ORDER AND
JUDGMENT OF THE MISSISSIPPI EMPLOYEE APPEALS BOARD OF OCTOBER 21,
1992, IS REINSTATED IN ITS ENTIRETY. ALL COSTS ARE TAXED TO THE
APPELLEE.
BRIDGES, C.J., McMILLIN AND THOMAS, P.JJ., COLEMAN, DIAZ, HERRING,
HINKEBEIN, KING, AND PAYNE, JJ., CONCUR.